Once you’ve mustered up the courage to approach a foreign market, it’s time to decide which countries you want to target. Here are a few ways to determine whether your business will be successful entering another country:
Perform Market Research
Start by performing market research to determine the demand for your product or service amongst consumers in a foreign economy. The best way of going about this is to figure out how big the market is by creating a profile for your target customer. You’ll also want to consider whether there are any existing players in the industry and if consumers would be partial to purchasing from a company that was founded in their home country. As a general rule, you shouldn’t enter a market where there is overwhelming uncertainty over whether there is a high demand for your product or service.
Determine the Cost
Before entering a foreign market, you’ll want to determine all the costs involved to make sure that your business can afford it. Make a list of costs, which might include research, travel, real estate, shipping, supplies, and labor. If there is an opportunity for substantial cost savings in a particular country, you might choose to enter a market primarily for its profit potential. Assuming your business does not have enough cash to afford an expansion, you will also need to consider available financing options and which one makes the most sense for your business.
Know the Rules
A completely different set of laws apply to businesses that operate in a foreign country. A few ways that laws will typically impact a business include licensing, taxation, customs, trade, shipping, and labor. Assuming you plan to hire employees in a foreign country, you’ll need to research employment laws and regulations that apply. It’s best to discuss your plans to expand internationally with a licensed lawyer in that country. After researching which laws would apply to your business, you’ll want to discuss whether it is even a viable option to enter the foreign market.
Selecting a country to target as an international entity is not always an easy decision to make. There is typically a substantial amount of research that needs to be done before you can determine whether a particular country is a right fit for your business. In the next article in the series, I’m going to discuss how you can identify emerging markets or countries that are particularly appealing to businesses for their current and future growth potential.